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Ridiculous Trading Myths

  • #261
  • Nov 11, 2010 9:02am Nov 11, 2010 9:02am
don't know if that is making it harder, or easier. i don't believe pit traders have (had?) charts in front of them as they yell and scream, but maybe i'm wrong.
Congratulations ScalaFX for coming out of the closet!
  • #262
  • Nov 11, 2010 9:05am Nov 11, 2010 9:05am
Quoting nubcake
don't know if that is making it harder, or easier. i don't believe pit traders have (had?) charts in front of them as they yell and scream, but maybe i'm wrong.
the two or 3 most respected orderflow traders ive seen on this forum have I have heard talk of not trading with charts (yes, Darkstar, Gston and another guy I forget). Is order flow really simply price information?

Maybe they watch DOM or something similar that is a well kept secret. Honestly I dont know and it has always puzzled me...
Time hides Nothing
  • #263
  • Nov 11, 2010 9:09am Nov 11, 2010 9:09am
The top 2 most ridiculous trading myths I've ever heard:

1.) All day traders are gamblers
2.) Speculators are evil

EDIT:

Also forgot another one:

3.) Short sellers are hurting the market <---this one makes me lol every time
https://www.huntingtrader.blog
  • #264
  • Nov 11, 2010 9:11am Nov 11, 2010 9:11am
no idea. perhaps they know volume as well or something. everyone who implies they have a clue advises to keep things simple. perhaps they are just baking their cakes the right way while the rest of us are just dumb making mud pies.

that, or they have an extra piece of intuition or background knowledge they don't realise they apply, or don't want to admit they are applying. some people can run a marathon, some can't.
Congratulations ScalaFX for coming out of the closet!
  • #265
  • Nov 11, 2010 11:23am Nov 11, 2010 11:23am
@Cindy and Nubcake,

People who trade without charts successfully usually are those who rely on other types of information (other than the mere graphical representation of past prices), such as insider info, news/news to be released, etc. etc.

Some do that, plan a trade to exploit the information, and look only at charts when about to place the trade (to better gauge an already planned entry/stop, etc).

Without going into detailed examples, perhaps I should tell/remind you that some of the market participants that may have effect on price (i.e. whose transactions may significantly move price) may not even look at historical prices/charts when making a transaction. They don't care if it's a support or resistance level, what the current trend is, etc. They just go in and make their (huge) transaction and you see price moving strongly in one direction for no apparent reason and contrary to your expectations and analysis, and then they take their money out and go on with their business.

So yeah, what matters is to trade on some sort of valid information in order to have an edge, and since charts aren't the ONLY source of information about a market, you'll definitely find those who trade without them.
  • #266
  • Nov 11, 2010 11:26am Nov 11, 2010 11:26am
Quoting Marv
@Cindy and Nubcake,

People who trade without charts successfully usually are those who rely on other types of information (other than the mere graphical representation of past prices), such as insider info, news/news to be released, etc. etc.

Some do that and look only at charts when about to place the trade (to gauge entry).

Without going into detailed examples, perhaps I should tell/remind you that some of the market participants that may have effect on price (i.e. whose transactions may significantly move price) may not even look...
Thanks for the insight Marv however for me to dothis is useless as I have no "insiders" and any fundermental info I can get is the tip of the pyramid in terms of time and quality compared to what the "other guys" have access to...

At a retail level I struggle to see how one could do this legally

So is there anyway you know of that a retail guy could take on the heavy weights without a chart?

P.s - A chart includes volume and DOM data IMO - Just interested as its like a puzzle I have never worked out, but for now the charts will do me fine.

And... you dont have to answer taht = )
Time hides Nothing
  • #267
  • Nov 11, 2010 11:28am Nov 11, 2010 11:28am
Quoting StockHunter
The top 2 most ridiculous trading myths I've ever heard:

1.) All day traders are gamblers
2.) Speculators are evil

EDIT:

Also forgot another one:

3.) Short sellers are hurting the market <---this one makes me lol every time
Agreed, lol.
  • #268
  • Nov 11, 2010 11:32am Nov 11, 2010 11:32am
Quoting CindyXXXX
So whats the point o making it so hard? The chart could save a lot of headaches surely! but I see what your saying... Now THAT would take some skill...Almost like a blind man skateboarding!!!
While they cannot see; I used to care for a blind guy, all their other senses are far more sensitive.

My dad, was a chef, used to have a saying when putting food on the table, "Don't eat with your eyes." The same can/should be said for trading.
  • #269
  • Nov 11, 2010 11:36am Nov 11, 2010 11:36am
Quoting Slack
While they cannot see; I used to care for a blind guy, all their other senses are far more sensitive.

My dad, was a chef, used to have a saying when putting the food the table, "Don't eat with your eyes." The same can/should be said for trading.
Thats deep! And makes sense!
Time hides Nothing
  • #270
  • Nov 11, 2010 11:51am Nov 11, 2010 11:51am
Quoting CindyXXXX
Ive always wondered how people trade without them myself....?
something on the lines of "if price moves to x, it will go to y before exhaustion....

example:
if previous week's range was '#' pips, buy/sell on the breakout of 0.x*# above/below the open with 0.y*# as TP and 0.z*# as SL.

but honestly, I don't know...just guessing...
  • #271
  • Edited 12:32pm Nov 11, 2010 11:53am | Edited 12:32pm
Quoting CindyXXXX
Ive always wondered how people trade without them myself....?
daily ohlc is one way to do it

for instance, look at daily closes at weekly pivots in comparison to the previous day (vsa) low close below previous range @ s/r = sell
Invincibility lies in the defence, the possibility of victory in the attack
  • #272
  • Nov 11, 2010 12:00pm Nov 11, 2010 12:00pm
Quoting CindyXXXX
So is there anyway you know of that a retail guy could take on the heavy weights without a chart?
Yes, using charts and orderflow/tape reading. But then you have to remember that you're only a very small fish trying to follow the stream, you have to get that ego under control and never ever force your opinions on the market, and you have to develop a (sort of) subconscious sense to read the significant market activities through such limited means (skill 1) such as charts/indies/public news or whatever, and how to use them to your advantage (skill 2), which obviously not everybody can develop.

People with insider info and whatnot invest on things that are going/supposed to happen (based on real info not guesses). You on the other hand can't do that, your goal is to invest on things already happening; but as already mentioned, to 'see' and exploit these things is not for everyone. They are usually hidden/distorted by two things:

1) A shitload of market noise
2) Your own trading education/misinformation, distractions (systems, TA "rules", etc) and illusions (i.e. seeing what your minds wants to see, not for what things really are)

@Slack: well said.
  • #273
  • Nov 11, 2010 12:16pm Nov 11, 2010 12:16pm
Quoting Marv
The holy grail is a term that, when used within the context of trading/gambling, refers to a system/method/strategy/style/whatever that wins consistently.

I'm saying that it's amusing to hear people say there is no holy grail, you just have to win more than you lose. lol
According to certain medieval Christian legend, the Holy Grail is a sacred object. It's normally identified with the cup used by Jesus at the Last Supper and said to possess miraculous powers. Hence it's apparently been sought by many (kings, priests, knights, .... anybody remember the Monthy Python movie?), but apparently nobody has actually ever found it.

Consequently, in a trading sense, I've always assumed that it related to an elusive, magically perfect system that guaranteed its owner consistent profit for a lifetime without any risk. On that basis, I'd say that it doesn't exist.

But if one's definition is merely a system/strategy/approach that makes more money than it loses, within the bounds of statistical error, then of course that's possible.
  • #274
  • Nov 11, 2010 12:26pm Nov 11, 2010 12:26pm
Myth: that one Martingale trading system offers better risk-adjusted-return than another.

Myth: that backtesting a Martingale system is a worthwhile exercise.
  • #275
  • Edited 1:03pm Nov 11, 2010 12:40pm | Edited 1:03pm
Quoting hanover
Myth: that one Martingale trading system offers better risk-adjusted-return than another.

Myth: that backtesting a Martingale system is a worthwhile exercise.
Martingle = Gambling

Gambling in trading = Smallest fish in the sea

just my opinion
Time hides Nothing
  • #276
  • Nov 11, 2010 12:55pm Nov 11, 2010 12:55pm
Quoting CindyXXXX
Martingle = Gambling

Gambling in trading = Smallest fish in the sea
As a former Martingaler, I can confirm.
  • #277
  • Nov 11, 2010 1:11pm Nov 11, 2010 1:11pm



"Traders who spend time in a forum are not profitable."




  • #278
  • Nov 11, 2010 1:37pm Nov 11, 2010 1:37pm
Quoting pip_seeker


"Traders who spend time in a forum are not profitable."



"Traders who spend time in a forum are profitable."

Sorry, couldn't resist.
Stay calm, be brave, wait for the signs - Jasper Friendly Bear
  • #279
  • Nov 11, 2010 2:23pm Nov 11, 2010 2:23pm
Whether you scale up, down, in, out, or don't scale at all, it doesn't matter. The good thing about trading is that you can do nothing wrong, except for trading at all! Unless you have an edge, the market is random to you anyway, and consequently almost nothing you do really matters. This also means psychology cannot mess things up!
The only thing is that if you have an edge, and you trade for more periods (up to infinity), you should limit your value at risk for each position. If the distribution of winners is random, and you trade to infinity, the geometric mean is maximized at optimal F. For non-infinite trials, the geometric mean is maximized at a level somewhere above optimal F. If the winners are not randomly distributed, the geometric mean is maximized at a level below that of a random distribution. That means if you system tends to have periods of success, followed by periods of failure, you should risk less per trade.
The nail that sticks out gets hammered back in
  • #280
  • Nov 11, 2010 2:32pm Nov 11, 2010 2:32pm
Quoting CindyXXXX
Martingle = Gambling

Gambling in trading = Smallest fish in the sea

just my opinion
To be honest, there is no room for opinion. Following my post above, martingale is no more gambling that anything else. It is just an (often unconscious) choice for a high probability of small returns versus a small probability for large drawdowns. It is true that non-linear returns have the tendency to let market participants underestimate underlying risks. Note that this is exactly what happened during the subprime crisis. It is good that Hanover "busted" the myth, especially for the unconscious martingalers, but please consider what I'm saying.

*Note that the drawdown does not necessarily has to imply bankruptcy... You can also martingale and risk only a portion of your account.
The nail that sticks out gets hammered back in
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